Canada Hotels Post Record RevPAR in 2025, Outlook Calls for Moderated Growth in 2026

Canadian hotels achieved a historic high in RevPAR in 2025, driven by ADR gains and resilient domestic travel. While regional performance varied and trade tensions weighed on select markets, the sector enters 2026 with projected growth, major event tailwinds and sustained investor interest.

According to Cushman & Wakefield, Canadian hotels closed 2025 with record-setting performance, as national RevPAR reached an all-time high of $142.89, up 4.1% year over year. The results marked another milestone for the sector, although growth was uneven across regions.

Ontario and Quebec trailed the national average, with border markets and areas closely tied to U.S. trade activity facing headwinds. Ongoing trade disputes with the United States weighed on cross-border demand, particularly in Southern Ontario. At the same time, a shift in leisure travel patterns provided a counterbalance. More Canadians opted to vacation domestically rather than travel to U.S. destinations, benefiting tourism-driven markets across the country.

In several submarkets, the introduction of new hotel supply coincided with moderating demand growth, tempering overall performance gains.

Looking ahead, political and trade uncertainty is expected to persist into 2026. However, the national hotel market is still projected to expand. Similar to 2025, gains are anticipated to be driven primarily by average daily rate (ADR) growth rather than occupancy, as demand is forecast to remain relatively subdued.

Major event activity is expected to provide incremental lift in select gateway markets. Toronto and Vancouver are slated to host matches during the FIFA World Cup in June 2026, which is expected to generate additional compression and pricing strength in those cities. CoStar forecasts 1.9% RevPAR growth in Canada in 2026, compared with 0.6% for the United States.

From an operational standpoint, cost pressures remain a concern. Hotels continue to face inflation across several expense categories, alongside a tightening labor environment. Federal reductions in international student visas and temporary foreign worker permits are affecting workforce availability, complicating staffing efforts. At the same time, non-controllable expenses—including energy, property taxes, and insurance—are rising, further pressuring net operating income margins.

Despite these challenges, investment fundamentals remain constructive. Lower interest rates and increased capital availability are supporting transaction activity, with investors continuing to view hotels favorably relative to other asset classes. According to the report, 2025 ranked among the stronger transaction years of the past two decades, highlighted by several notable trades involving full-service and luxury properties.

As the industry enters 2026, performance is expected to moderate from recent highs but remain positive, supported by pricing power, event-driven demand and continued investor appetite.

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